Withdrawal Restrictions

Your employer's 403(b) plan may have restrictions for withdrawing assets from their 403(b) plan. Check with your employer for details about the withdrawal provisions allowed by their plan. If you meet the requirements for withdrawing from your employer's plan, there are several guidelines to consider before making a final decision.

 

Q: Will I be required to pay taxes on my withdrawal?
A: Since no income tax has been paid on the payments to your account, you would need to report your withdrawals as income on your income tax return. A 10% federal surrender fee will also be due on the amount withdrawn unless it is:

  • Made after age 59½
  • Made after a severance from employment occurs after turning age 55
  • Made on account of your death, disability, QDRO, or made in substantially equal payments over your lifetime

 

Q: When will my contributions be available for withdrawal?
A: Withdrawals are available if you meet one of the following conditions and are subject to employer plan rules:

  • You attain age 59½
  • Your death or total disability
  • Separation from service
  • Severe financial hardship (limited to contributions only)
  • Qualified Reservist Distribution
  • Qualified Domestic Relations Order (QDRO)

 

Q: What qualifies as a hardship?
A: Hardship distributions are an immediate and heavy financial burden caused by one of the following events:

  • Purchase of a primary residence
  • Payment of rent or a mortgage to avoid eviction or foreclosure
  • Funeral expenses for an immediate family member of employee
  • Uninsured and unpaid family medical expenses
  • Unpaid family education expenses over the secondary level
  • Expenses for the repair of damage to primary residence that are deductible for federal tax purposes

 

Before requesting a withdrawal, you should familiarize yourself with any possible lost tax advantages or potential surrender fees. For more information about hardship requirements and qualifications, please contact American Fidelity at 800-662-1106. For individual tax advice please consult your tax advisor.

ESB-787-0411

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